Amid growing inflationary concerns, the Chinese Ministry of
Agriculture announced Tuesday it would issue monthly reports on
agricultural product prices to increase "market transparency and
offer guiding information for farmers".
"The fluctuations of agricultural products are closely related
to the overall performance of the national economy," Gao Hongbin,
vice minister of agriculture, told reporters.
"They also affect the interests of both producers and
consumers."
Rising farm product prices have done little to benefit farmers,
the minister said, with most of the gains going to those who
process, deliver, sell and consume the products. He said domestic
prices were increasingly influenced by global markets, whose
influence could be transmitted to China through imports and futures
exchanges.
Global wheat stocks are the lowest since 1976 and supplies of
other major agricultural products are also tightening.
Driven by high grain and pork prices, China's consumer price
index, a key barometer of inflation, rebounded to 6.5 percent in
October, up from 6.2 percent in September to match the 11-year
monthly record in August.
"There is a strengthening correlation between prices of
agricultural products and other primary commodities such as oil and
coal," said Gao,
Oil prices recovered Tuesday from an early slide as the U.S.
dollar hit a new low against the euro, attracting speculators who
trade oil futures using other currencies.
Light, sweet crude for January delivery was 95.60 U.S. dollars
per barrel in electronic trading on the New York Mercantile
Exchange at midday European time.
Zhu Hongren, a deputy department director at the National
Development and Reform Commission (NDRC), said high crude oil
prices have already put pressure on production materials, which in
turn could drive up prices of industrial products and
commodities.
Surging commodity prices are exerting mounting pressure on
inflation, Zhu warned ahead of the release of October inflation
data. First monthly report
During Tuesday's news briefing, Zhang Yuxiang, chief economist
with the ministry, delivered the first monthly report on prices of
major farm products including rice, wheat, corn, soybeans,
oilseeds, cotton, sugar, pork and other meat, eggs, seafood, and
produce.
She delivered the results of a survey that reviewed price
changes of these products in October and forecast possible price
discrepancies between domestic and international markets.
For instance, she said, domestic soybean prices showed steady
growth in October, rising 7.7 percent from a month earlier and 72.6
percent year- on-year. In the same period, the world price
approached a record high, increasing 56.2 percent year-on-year to
376 U.S. dollars a ton in futures trading on the Chicago Mercantile
Exchange on Oct. 30.
The full text of the report is available on the ministry's
Website (www.agri.gov.cn)
Inflationary risks
A report by the Bank of China warned that inflationary risks
would extend to non-food sectors, which are under considerable
pressure from increasing resource costs.
Faced with worsening fuel shortages, China has raised gasoline,
diesel and jet fuel prices by nearly 10 percent. However, its
wholesale gasoline prices are still below the international average
(about 76 U.S. dollars a barrel compared with the international
average of 102 U.S. dollars)
Transportation expenditures are expected to lead a significant
rise in non-food prices in November and December, said the
report.
The bank suggested restrictions on food, energy and commodity
exports would help curb overall price hikes. However, it said, a
sharp rise in the value of the yuan, which has been advocated by
China's major trading partners, would be "unrealistic" because the
gap between domestic and international prices was "relatively
big".
Consumer prices for non-food items rose 0.35 percent
month-on-month in October, compared with a 0.25-percent monthly
rise in September.
Market observers said the government would continue to use
tightening measures such as interest rate hikes to rein in excess
liquidity.
This contention was echoed by central bank governor Zhou Xiaochuan, who said there was
"considerable room" for further hikes in the reserve ratio, another
tightening weapon.
Government concerns
With inflationary risks increasing, Chinese Premier Wen Jiabao said earlier this month that the
government would take further measures to stabilize prices to
maintain market and social stability.
"Prices have been on the rise these days and I'm aware that even
a one-yuan increase in prices will affect people's lives," said Wen
during a visit to some needy citizens in the Dongcheng District of
Beijing.
Wen said the government would boost investment in farm
infrastructure construction and increase direct subsidies to
farmers to maintain grain acreage and encourage planting of oil
crops and vegetables.
He also pledged comprehensive measures to expand crude oil
production and refining capacity to guarantee supplies of oil
products.
The premier also called for stepped-up market monitoring to
clamp down on price-rigging and maintain normal market operations.
He added that the government would raise retirees' pensions and
hike minimum allowances for needy residents. It would also continue
to subsidize school canteens and public transport.
"Only when people's quality of life is improved will we feel
reassured and believe we did a good job," he said.
(Xinhua News Agency November 21, 2007)
